Video settings

Maccas blames idle youth for falling sales

McDonald's is blaming youth unemployment for falling Australian sales, but senior BusinessDay reporter Eli Greenblat says there are indications the fast-food industry is losing its grip on public consumption.

McDonald's, the world's biggest fast-food chain, says sales in Australia are going backwards, citing incorrect figures on the level of youth unemployment to help explain why fewer people are buying its burgers and fries.

Although the introduction of the "Loose Change" menu in 2012 bolstered sales of its food last year, thrifty consumers have withdrawn from even that bargain basement offer and are spending less at the McDonald's counter.

Addressing investors in the US, McDonald's global chief executive and president Don Thompson warned that lower levels of spending in Australia and cut-throat competition among fast-food chains in the region had slashed revenue for the company.

No thanks ... Australian fast-food diners are spending less at McDonald's.

He told the mostly US audience that the economy in Australia had worsened since 2012 and is reported to have said that youth unemployment had hit more than 25 per cent.

Advertisement

"Australia is another one of those markets that at this point in time we see from their perspective you're seeing some softer – clearly a softer economy," Mr Thompson said during a presentation for McDonald's second-quarter earnings.

"Youth unemployment in Australia is about 25.5 per cent. So they're facing something; unemployment for them has risen."

According to recent figures from the Australian Bureau of Statistics there were 116,500 unemployed 15- to 19-year-olds, equating to 14.5 per cent of those in the labour force. The ABS reported the youth unemployment rate in May was 11.6 per cent.

But consumer confidence has continued to sour in Australia, hitting recessionary lows, with not even meals costing a few dollars able to tempt people to open their wallets.

However, McDonald's has grown market share in Australia, Mr Thompson told US investors, most likely taking customers away from other fast-food chains. But it still recorded a drop in comparable store sales across the country.

McDonald's value-meal initiative in Australia last year helped resuscitate earnings along with a range of other offers such as its Olympic sponsorship.

The local branch of the US fast-food chain took customers from rivals to hit 50 per cent market share in New South Wales.